Chancellor urged: sell gold to the Chinese

[54anickel]

http://observer.guardian.co.uk/business/story/0,6903,1418353,00.html

Gordon Brown should use his trip to China this week to urge Beijing on a gold-buying spree if he wants to achieve his debt relief plans, analysts say. A buyer with deep pockets, suggests Kamal Naqvi, precious metals analyst at Barclays, could be the best route to persuading Washington to back the Chancellor's proposal for an IMF gold reserves sale to help the world's poorest countries.

'If you can find a big buyer, you can do the sale without affecting the market. China and Japan are the potential white knights, because their gold reserves are so small,' said Naqvi.

Fears that a sell-off could send the gold price plunging have provoked fury among US senators, 20 of whom last week wrote to the Treasury Secretary, John Snow, urging him to reject the plan, which the IMF had been asked to investigate following a summit meeting of G7 finance ministers in London earlier this month.

But Naqvi says a sale could aid gold prices if Brown could drum up rich, new customers. The Chinese government holds only 1 per cent of its vast reserves in gold, compared to a global average of around 10 per cent. 'The basic feeling is that they need to diversify out of dollars, and the full 3,000 tonnes of IMF reserves allows them a one-time opportunity to do that.

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[whistle]

1. Chinese don't want gold, they want technology and knowhow....

...and capital goods and useful resources

[rzemanfl]

2. And we want their cheap crap at WalMart? n/t

[54anickel]

3. I'd be willing to bet they'll bite if it's actually offered to them and at

a fair price.